Kist, Vibor sign merger MoU

KATHMANDU, MAR 22 -

Kist Bank and Vibor Bikas Bank have agreed to merge, in a move that will support Jyoti Group’s bid to acquire the largest stake in Kist.

Kist Managing Director Kamal Gyawali and Vibor Director Roop Jyoti signed a memorandum of understanding (MoU) for the merger on Thursday.

Although Jyoti group has been in the financial sector for the last one and half decades through Bhajuratna Finance, which was merged with Vibor last year, the group’s entry into Kist will ensure its prominent presence in the sector.

The Jyotis are preparing to acquire a 12 percent stake in Kist from Guna Group, which holds 26 percent shares in the bank. Guna’s chief Rajendra Shakya is facing troubles in his real estate ventures.

Kist and Vibor have to complete the merger within six months after the MoU signing, as per the merger guidelines issued by the Nepal Rastra Bank.

The banks have said a merger committee will be formed to fast-track the process and reputed auditors will be appointed to conduct due diligence audit (DDA). The swap ratio (the value of each Kist share against Vibor’s) will be maintained based on the DDA report, according to the banks.

The name of the merged entity will remain Kist Bank. As both the banks are currently incurring losses particularly due to their huge exposure to the realty sector, Gyawali said Kist will turn into profit at the end of the fiscal year after the current provisioning will turn into profit following a write back. He said entry of a reputed business group like the Jyotis as the biggest shareholder would guide the bank to the direction of success.

Jyoti Group had started acquiring shares Kist shares even before the announcement of the merger. The group recently bought more than 500,000 units of the bank’s public shares owned by Shakya through the secondary market. “We purchased the public shares to give momentum to the merger process,” said Jyoti Group Vice-chairman Roop Jyoti.

Vibor Properties, a Vibor Bank subsidiary, will be sold before the completion of the merger, while Vibor Capital will remain as Kist Bank’s subsidiary after the merger. “We are looking at a modality to sell the company,” said Vibor Director Ajaya Ghimire, who stepped down as the bank’ CEO after the merger decision.

Vibor Property has already sold many of its housing projects and it now owns a 71-ropani land plot in Chobhar, Kathmandu. Officials of both the banks said the merger “will not be that complex” as Vibor has only six branches, while Kist has 51 outlets. Moreover, both the banks use the same banking software.

Ghimire said staff management will be easier as Vibor has a very few branches. “Vibor’s deposit base and lending is also limited, which will expand the expansion scope for the merged entity,” he said.

As of the second quarter of this fiscal year, Kist has a paid-up capital of Rs 2 billion and deposit mobilisation of Rs 20.98 billion. The bank has extended Rs 17.59 billion loans and its capital adequacy ratio stands at 10.80. Kist incurred a loss of Rs 69.57 million in the second quarter.

On the other hand, Vibor has a paid-up capital of Rs 916.2 million, deposits worth Rs 2.86 billion. It has extended credit worth Rs 1.68 billion and its capital adequacy ratio is 13.75 percent.

Source: The Kathmandu Post